18 Questions
In the scenario provided, who is considered a supplier of funds?
Rose
What is the role of a financial market in the scenario?
To provide a platform for buyers and sellers to meet
What is a private placement in the context of the scenario?
An exclusive arrangement between Rose and Jack
What is the purpose of treasury bills, commercial papers, and certificate of deposit in the financial markets?
To offer relatively safe, interest-bearing assets for idle funds
Which term best describes a marketplace where equities, bonds, currency, and other financial securities are traded?
Financial market
How do bonds differ from stocks in the financial markets?
Companies use bonds to finance projects, while stocks are used for temporary financing.
What do financial institutions do in the scenario?
Match suppliers of funds with users of funds
What role do investors play in the stock market?
Buying and selling ownership shares
What motivates Rose to lend money to Jack in the scenario?
Jack's profitable business operations
Where are securities with longer-term maturities typically sold?
Capital markets
Why do companies and governments use bonds as a form of financing?
To finance various projects and activities over defined periods
What is the primary function of the stock market for investors?
Enabling buying and selling of ownership shares
What is the primary function of the financial system?
To distribute funds from investors to users of funds
In the context of the text, who would be classified as a 'user of funds'?
Jack, the entrepreneur
How does the financial system facilitate the process between savers and users of funds?
By allowing savers to lend directly to users
Where would an entrepreneur like Jack go to obtain additional funding for expanding his business?
Stock market
Which financial market deals with securities with maturities of one year or less?
Money market
In financial terms, what role would Rose play if she invested her idle cash in financing activities?
Saver of funds
Test your knowledge on money market instruments such as treasury bills, commercial papers, and certificate of deposit. Learn about how individuals, businesses, governments, and financial institutions use these instruments for short-term financing and investment purposes.
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